The concept is related to user innovation, cumulative innovation, know-how trading, mass innovation and distributed innovation and can be part of business innovation, product innovation, service innovation, and management innovation.
Underpinning it is the concept that firms should use external ideas as well as internal ideas and internal and external paths to market. The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead license processes or inventions from other firms.
In addition, internal inventions not being used in a firm's business should be taken outside the company through licensing, joint ventures or spin-offs. The increasing availability and mobility of skilled workers, growth of venture capital markets, the external options for ideas sitting on the shelf, and the increasing capability of external suppliers all promote this paradigm.
Open innovation should not be confused with open source innovation, which stresses communal control and totally subjugates ownership rights to the benefits from open source program development.